Archive for March, 2010

Over the years the Human Resources Department has transitioned through any number of “latest thinking” management concepts and corresponding “buzz phrases” – from “matrix management” to “broadbanding” to “onboarding” and “headwinds”. Each new approach seemed the brainchild of management consultants seeking to encourage what they called creative thinking and the latest strategies to improve the human factor.

Lately though a persistent theme has settled in that HR should become a “Business Partner” of the organization, in order to be taken seriously by senior management and enhance the value-added contribution of its programs. This encouragement suggests that HR is not currently a player on the Senior Executive team – but needs to be.

So what exactly is an HR business partner? Several key criteria have been tagged as descriptors:

Diagnose business needs

Develop management’s capability to address HR issues

Provide advice and a point of view

The primary focus is driving the business forward

To educate, motivate and influence others

Does the above describe the HR function at your company? Is HR considered a business partner?

Your Father’s Personnel Department

Today most would chuckle at memories of the “old” Personnel department, whose primary responsibilities seem to have been tasks like recruiting, record keeping, arranging the blood drives, the safety shoe program and running the annual picnic / Christmas party. The head of Personnel was rarely considered a “player” at management meetings. Some in management claimed that the department was only a necessary evil.

That Personnel was viewed as the department focused on the interests of the employees. Its management was staffed by employee relations generalists, was sensitized by the needs of employees and left the running of the business to the “businessmen”. Personnel dealt with people.

Today, companies expect more. Leadership expects less transactional administration and more strategic thinking. Being labeled a “people person” is now considered a negative, a source of humor among recruiters.

What are the signs that HR is a true business partner at your company?

Direct report to the President / CEO and listed as a member of the Senior Team

Able to speak with credibility and respect at the management table

Able to advance the value of HR to those holding negative biases

Consulted by senior management on human factor issues

Company decisions affecting employees are initiated by the head of HR

As a newly designated business partner-wannabe, Human Resources in many companies has transitioned away from the traditional role of caring for / representing the employees. It has focused instead on utilizing the human capital to assist management in achieving objectives and driving business success. However, the more successful HR has become as a business partner the greater the danger that employees will lose trust and confidence in HR, exactly because the focus has moved away from employees.

As HR has developed a new stratagem, some might say a new identity, what has been the cost to the original mission? What part of itself has been lost while chasing the role of business partner?

Danger Signs

Have a care that you don’t lose the heart and soul of HR – its caring connection about employees. Don’t start looking at them as merely numbers on a spreadsheet or boxes on an organization chart. There are other departments who already do that very well.

Is the HR function served or harmed by leadership that is “counting the chairs” on their way up the hierarchy? These are typically fast-trackers who are not HR-trained, but only temporary visitors to the department for a “broadening” of their management experience. Why is that acceptable for the HR function, but wouldn’t be tolerated in IT, Finance, Marketing, Engineering or Manufacturing? Is the head of any of these other functions anything less than a seasoned expert in that profession?

Why is HR viewed as different? Why are other functions already presumed to be business partners? Only HR is being challenged, remaining a newbie, on probation at best, at worst one step away from getting the coffee.

Lip service to the people department? Even while sitting at the Senior Management table negative biases from the old days often remain:

Remember the safety shoe program? It’s hard to be taken seriously after so many years focusing on administration. Does HR deal with important issues today?

If the head of HR has only been appointed to gain experience toward their ultimate loftier goal, how serious can we take a temporary worker who is only passing through?

HR is still perceived of as offering restrictive advice, what can’t be done; they remain the gatekeeper of corporate policies. Being an advocate of policy doesn’t win friends.

From the employee’s perspective it is important to consider HR as the source and advocate of fair and equitable treatment, compliance with all regulations affecting employees, and their representative among senior management.

What if senior management doesn’t feel that way? What if they want HR to become just another “business partner” concerned more about the bottom line – to the exclusion of the human factor?

Have a care that we get what we want – Business Partner – and then our employees choke on it as we lose our way.

According to a report issued by the Bureau of Labor Statistics on February 10, 2010, strike activity during 2009 was at its lowest since 1947, 62 years ago. BLS defines a major strike or lock-out as those involving at least 1,000 employees. Fifteen such events occurred in 2008, five in 2009. A total of 72,000 employees were idled by a strike or lock-out in 2008, compared to 13,000 in 2009. Of the five major strikes or lock-outs in 2009, three involved public sector employees. Last month we reviewed that for the first time in history, public sector union membership exceeded private sector union membership, which fell to 7.2% of the workforce, another record low. The reduction in strikes and work stoppages and decline in membership are both due in part to economic conditions – who will go out on strike in a recession? – but also evidence labor’s declining muscle in the workplace. When these dynamics are considered with labor’s apparent missed opportunity with EFCA, it indeed is a bleak time for labor, but it is not the end of labor.

Where will organized labor go from here? Labor will continue to engage in discussions regarding unification of the labor movement. For example, the solidarity agreement between the AFL-CIO and the National Education Association was scheduled to expire on January 1, 2010. However, both organizations extended their agreement and discussions through June 30, 2010. A merger of those organizations would create a labor organization of approximately 12 million members, and that does not include the Change to Win Coalition, which could bring an additional 4 million to 5 million members. Thus, expect to see labor continue to consolidate and unify, so that it speaks with one voice politically and can become more dynamic in its efforts to organize non-union employees.

Expect labor to target its organizing efforts nationally toward those employees who are most vulnerable and have the fewest employment opportunities should they lose their jobs – those in the lower income groups as reviewed in the prior article. Also, expect labor to shift from a “behind the scenes” political emphasis in Washington to more of a “on the streets” or “in your face” behavior toward the private sector. Although labor will pursue legislation and NLRB appointments, we expect labor to return to tactics it used 70 years ago when its private sector membership was over 35% – leading workers in protest and aggressive actions over the economic circumstances in our country.

Are You in the Restaurant, Construction or Health Care Industries? If so, below is an excerpt from the most recent DOL in Action newsletter you need to read. Just like the IRS is doing with Independent Contractor misclassification Concerns, the DOL is doing with Wage and Hour, and Safety and Health concerns.

Department Launches Enforcement Efforts in Utah and Denver

The Department’s Wage and Hour Division (WHD) has launched a pair of concentrated enforcement efforts in Utah and the Denver metropolitan area to combat violations of federal minimum wage, overtime pay and child labor regulations. In Utah the initiative will focus on the restaurant industry by conducting approximately 65 establishment investigations. In addition to restaurants, the Denver initiative will include construction sites, where WHD plans to use the results to develop future strategies to increase compliance levels in order to secure safe and healthy workplaces for employees.

DOL’s Wage and Hour Division is currently conducting a compliance initiative in the health care industry for all New York state counties north of New York City. This initiative from the Albany District Office aims to promote compliance with the minimum wage, overtime, recordkeeping and child labor provisions of the Fair Labor Standards Act (FLSA), and to ensure employees are protected and compensated in accordance with the law. Investigations during the last five years revealed that less than 36 percent of health care employers in that area were in compliance with the FLSA.

In its 2005 decision, Smith v. City of Jackson, the U.S. Supreme Court stated that disparate impact claims (involving employment actions that have a disproportionately negative impact on a protected class) are recognized under the Age Discrimination in Employment Act (ADEA), but further explained that such claim is not stated where the employer shows that its decision was based on a “reasonable factor other than age” (RFOA) even though the impact of the decision disproportionately affects older workers. The EEOC has now issued proposed revisions to the ADEA regulations regarding the meaning of “reasonable factors other than age.”

Facts and Circumstances. The proposed regulation is intended to clarify the scope of the RFOA defense. Under the proposed revision, whether an employment practice is based on RFOA is determined by the facts and circumstances of each case. The regulation also defines “reasonable factor” to mean “one that is objectively reasonable when viewed from the position of a reasonable employer . . . under like circumstances.” An employer seeking to use the RFOA defense must show that the employment practice was (1) “reasonably designed to further or achieve a legitimate business purpose” and (2) “administered in a way that reasonably achieves that purpose in light of the facts and circumstances that were known, or should have been known, to the employer.”

Reasonableness. The proposed regulation provides a non-exclusive list of factors deemed relevant to the reasonableness determination:

– Whether the employment practice and the manner of its implementation are common business practices;

– The extent to which the factor is related to the employer’s stated business goal;

– The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g. training, guidance, instruction of managers);

– The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;

– The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and

– Whether other options were available and the reasons that the employer selected the options it did.

Other than Age. The EEOC also proposes a non-exclusive list of factors for determining whether a factor is “other than age”:

– The extent to which the employer allows its supervisors to utilize unchecked discretion to assess employees subjectively;

– The extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and

– The extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.

The proposed revisions to the ADEA regulations are now open for public comment for 60 days from the date of publication. Once the comment period has expired, the EEOC will take some time to consider the comments before issuing final regulations.

JAN Updates: The best source of accommodation info To subscribe, e-mail subscribe@jan.wvu.edu. When subscribing, be sure to include the e-mail address at which you want to receive the newsletter.

California Fair Times from the DFEH- NEW FAIRTIMES is a quarterly electronic newsletter. To change or remove your e-mail address from the NEW FAIRTIMES mailing list, or for more information, e-mail annmarie.billotti@dfeh.ca.gov

Editor’s Column: Keeping Your Employees Motivated

During my recent workshops, a number of employers have asked me, “How do I keep my folks motivated?” What they really mean is “How do I keep them focused on growing the bottom line?”

I remind them of two things: (1) Maslow’s Hierarchy of Needs and (2) the formula for using our motivational dollars effectively. I mentioned Maslow last month. This column will have more to say about Maslow. Another article in this newsletter will discuss the retention formula to consider.

In 1954, Maslow wrote a paper entitled “The Hierarchy of Needs.” As I like to kid: Peter Drucker referred to it, Peter Senge refers to it, and everyone else named Peter refers to it. The reason: There’s no room for improvement – Maslow nailed it! The paper laid out five levels of need, as shown below. Let’s review each in turn.

Survival – This is the greatest need of many employees and many companies given today’s economic stress. This stress is largely self-induced, due to poor financial acumen and practices. Having said this, the most important question becomes “What money am I earning today?” That’s what it means for an individual or company to be in survival mode.Smart companies such as In and Out Hamburger (an incredible California-based private business) and Costco realized the value of paying entry-level employees at a rate above their competition. Consider how paying a few dollars above your competition will affect who you attract, how hard they work for you, and how long you retain them.

Security – Unfortunately, many folks still believe that the only form of job security is a union. Just ask the people at United, Delta, American, GM, Chrysler, and Ford. In fact, there’s only one form of job security: Doing a positive job, in a positive manner, where there’s a positive cash flow. Our responsibility, as leaders, is to make sure that our employees understand this by opening up the books and sharing the numbers. I encourage you to watch the Webinar we did with one of Jack Stack’s trainers on the Great Game of Business.

Belonging – You might as well substitute the words “company culture” here. Are you trying to maintain a positive attitude in tough times? Are you trying to make the work fun? Are you taking the time to brand your company to your employees? One low-cost way to do this is through company uniforms — whether work clothes, sports teams, or recreational clothing. If I walked into your company today, would I be able to define your company culture just by walking around? If not, why not?

Ego Gratification – The biggest mistake I see employers making here is ignoring the ego need, especially those of their superstar employees. Here’s an example: “Bob brings $200,000 to the bottom line every year and causes me no drama. I am so glad I don’t have to worry about him.” What an incredible mistake! Unfortunately, most organizations spend 80% of their time on the 20% of employees who don’t bring it every day and ignore the breadwinners; when in fact they should be doing just the opposite. The ego needs stroking. Give these folks awards, get them in the Business Journal or other industry publications, highlight them on your Web site, upgrade their titles, and so on.

Self-Actualization – Although I realize that it’s hard to worry about being self-actualized when you’re in a survival or security mode, this need still remains. I believe that self-actualization has to do with knowing that “you make a difference.” Do this by engaging your clients or customers in the conversation. How do you make or break their day? How does it affect them when they receive good or bad service? Have you brought some of your clients and customers and perhaps even prospects in for a focus group with your employees? Do your employees understand the “precessional” impact of their daily work?

For example, when I finally realized the precessional impact of my litigation career, I had no choice but to quit. Now I know that the work I do makes a positive difference.

This is what it takes to motivate employees. This probably won’t be the last time I mention Maslow. Within each of these categories, we have to be careful about how we spend our money. The next article will address this issue.

Getting the Biggest Bang for Your Motivational Buck

Much of what I share with HR That Works Members comes from my study of marketing. Take any marketing book, replace the words “client” or “customer,” with “employee” and you’ll learn a lot about improving the HR function. Consider the time-tested marketing formula: Cost, ease, and impact (which you’ll find in the Form of the Month spreadsheet) and ask yourself, “What’s the cost of this item, how easy is it to implement, and what’s the bottom line impact?”

For example, a hand-written thank-you note provides a low-cost, easy to implement, high impact motivational tool. In Harvey Mackey’s “Swim with the Sharks,” he shares how he built his business from thank-you notes. This raises two questions: (1) How many thank-you notes to your employees have you written lately? and (2) Have you mailed these notes to their homes – which shows the employees’ families that you acknowledge the contributions they make at work?

The Retention Program Possibilities (Form of the Month) document offers dozens of ways to show your employees that you care. How you do this is secondary. A final bit of advice: The greatest benefit is the one that’s least remembered. It’s usually the frequency of showing you care that matters the most.

The Employee Free Choice Act – Dead or Alive?

Although many employers might believe that the Employee Free Choice Act (“EFCA”) is dead, it isn’t. As with many other legislative initiatives, Congress pushed EFCA aside to focus on two other major pieces of legislation: Health care reform and “cap-and-trade.” Although EFCA appears headed for some compromise, it remains organized labor’s top legislative priority and a major objective for the Administration and Congressional Democrats.

EFCA was introduced in the Senate (S. 560) and House of Representatives (H.R. 1409) in March 2009. Since there were more than enough votes to pass it in the House, the focus of debate was in the Senate, where 60 votes are needed for cloture. Last spring and summer, a number of conservative Democrats expressed concern over a union’s ability to organize an employer without a secret ballot election. This is the so-called “card check” provision, which would force an employer to recognize and bargain with a union if a majority of employees in the bargaining unit sign cards supporting it. The opposition to card check by five or six Democratic Senators, together with the focus on health care reform and energy legislation stymied EFCA’s passage, which many commentators had thought would happen by the August recess.

Unfortunately for employers, it would appear that EFCA has been waylaid, but not forgotten. Although unions still are pushing for a bill which includes card check, a group of Senators, including Senators Brown (D-Ohio), Carper (D-Delaware), Harken (D-Iowa), Prior (D-Ark.), Schumer (D-N.Y.) and Specter (D-Pa.), have been working on a compromise, which they reportedly “think will bring 60 votes for cloture.” Indeed, Senator Specter reported the existence of such a compromise to AFL-CIO convention delegates in September.

Although the details are still sketchy, what appears to be emerging is a bill that would replace “card check” with a “quickie” election. Employers now normally have 42 days from the date a petition is filed with the NLRB to the date of the election to run a campaign. This period reportedly would be changed to just seven days under the compromise, which in most instances won’t be enough time to run an effective campaign. For sake of comparison, unions usually win a little over 50% of the elections in the U.S. (but only about 30% where the employer mounts a strong campaign opposing the union), compared with a win rate of more than 70% in the Canadian Provinces of Ontario and British Columbia, which require elections within five to 10 days. The EFCA compromise also reportedly includes a provision permitting union access to the employer’s premises during the campaign under certain circumstances, which currently is prohibited.

Perhaps even worse, the compromise in the works continues to require binding arbitration for a first contract. This means that if there were no contract agreement within 120 days, an arbitrator would impose a contract of two years duration. This is a huge change from current law, under which neither party can be forced to agree to any contract provision, and would prevent an employer from even attempting to remove a union until after the contract has expired. Under current law, if there’s no contract, a union can be removed one year after its certification as a bargaining representative.

Thus, while employers might have dodged the card check bullet, something almost as bad appears to be on the horizon. This means that employers desiring to remain union-free need to implement such measures as: (1) Effective group and individual communications mechanisms; (2) understandable and consistent personnel policies and procedures; (3) supervisory training on how to manage employees and avoid unionization; and (4) confidential employee surveys designed to measure objectively the effectiveness of an employer’s human relations program and uncover issues that could lead to unionization. Although you now have the ability to uncover and correct such issues, the law severely restricts your ability to do so once union organizing activity begins.

Will Your Company be in the Next EEOC Press Release?

To get an idea of the types of cases being pursued by the EEOC, click here.

They have been busy, for example issuing 20 press releases on Sept 30, 2009 alone!

The 1099 Time Bomb

We’ve been advising HR That Works Members to get their independent contractor act together. This is an exploding risk exposure driven in large part by the need of federal and state agencies to make sure that they collect all their taxes. The IRS estimates that the 1099 misclassification problem, due primarily to poor controls, has led to more than $8 billion in unpaid taxes.

As we advise members, “If it walks like a duck and talks like a duck — it’s a duck, no matter what you call it”. If you have any independent contractors and you’re an HR That Works Member, look at the new Independent Contractor Training Module, which includes a video, IC agreement, analysis worksheet, and a guide to many state and federal resources in this area.

Don’t take this lightly! In November of 2009, the IRS launched an audit of 6,000 companies, essentially to prove the value of hiring more auditors to collect more money. I can tell you what their conclusion will be: That they should hire more auditors because there will be a greater return on investment given the amount of unpaid taxes out there. This exposure is significant, not just from a taxation perspective, but as a liability and risk management issue. Bottom line: It’s far better to pay the additional taxes, workers comp premiums, and medical expenses than to run afoul of the misclassification analysis.

For more information, click here, and visit the Independent Contractor Training Module on HR That Works.

Working ‘on’ HR

Companies nationwide are struggling to survive. One of the greatest mistakes they make while in this mode is to stop working “on” their business and think that the only answer is to work harder “in” it. This is a classic entrepreneurial error. Just ask Michael Gerber, author of “The eMyth.” The competition is intense today and if you don’t distinguish yourself from your competition, how can you expect to recruit clients and customers from them? To succeed, we have to work not only on improving our sales and marketing acumen, but our workforce management acumen as well. The greatest “variance” at any company involves sales and marketing. If one salesperson outsells another salesperson two-to-one, that’s a 100% variance. What many companies fail to realize is that the second largest variance has to do with how well they manage their workforce. As the HR That Works Cost Calculator shows, it’s usually 10% or more of payroll. For example, if you have a $1 million payroll, a variance will cost at least $100,000 — the revenue equivalent of more than $400,000.

Here’s the point: This is no time to give up on improving HR practices. Doing so is a huge mistake! This doesn’t mean that you need to make an overhaul overnight – it means that you should engage in constant and never-ending improvement, taking at least one proactive step a month. In today’s economy, I’d recommend working on improving productivity, motivation, making proper termination decisions, and stepping up your compliance effort. Given the doubled rate of unemployment, workers are filing more wrongful termination, sexual harassment, ADA, FMLA, and similar claims than ever. The average employee win-rate is the highest on record, as is the average verdict. Failing to get your compliance act together literally can put you out of business.

Top Tip

Companies that impose automatic time deductions for meal breaks risk exposure to class-wide liability under the FLSA if they end up “shorting” nonexempt employees for hours worked due to interrupted or skipped lunch breaks. A recent spate of lawsuits against healthcare employers for alleged failure to pay wages due to such policies demonstrates this.

Companies use meal break auto-deductions for a variety of reasons. Sometimes it’s because automated timekeeping systems require a default meal period to be input. In other instances, the time expended getting to and from a remote time clock might be so great to make a default deduction preferable. In still other cases, employees might view punching in and out for lunch as motivated by employer micromanagement, making auto-deduction a “kinder and gentler” method of accounting for time. The FLSA risk arises when the employer fails to adopt practices that account for actual variation (i.e. the shorted lunch hour interrupted by work). If auto-deduction is the only practical method available of accounting for unpaid lunch breaks, companies should be able to help avoid FLSA liability by taking these steps:

Inform employees that they’re required to report any variation in the length of their lunch break to their supervisor so that their time record can be adjusted.

Require supervisors to review and sign off on time records to ensure that they reflect actual hours worked.

Make sure that the employee handbook advises employees that they should report any improper deductions or errors in their pay to their supervisor or to human resources promptly so that appropriate corrections can be made.

Finally, if you’re only using auto-deduction to avoid the “micromanaged employee” syndrome, consider explaining that punching in and out is not required for punitive reasons, but to ensure that employees are fully and fairly compensated.